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Valencia Capital Inc. — Proxy Solicitation & Information Statement 2025
Mar 17, 2025
47890_rns_2025-03-17_a94b4c67-0c06-4a4d-871e-a613722c40e9.pdf
Proxy Solicitation & Information Statement
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Valencia Capital Inc.
1111 Melville Street, Suite 620
Vancouver, BC V6E 3V6
Canada
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN THAT
The annual general meeting (the “Meeting”) of shareholders of Valencia Capital Inc. (the “Company”) will be held at 620 – 1111 Melville Street, Vancouver, British Columbia V6E 3V6 on Wednesday, April 9, 2025 at 11:00 a.m. (Pacific time) (the “Meeting”) for the following purposes:
- to fix the number of directors at three (3);
- to elect the directors of the Company for the ensuing year;
- to receive the audited financial statements of the Company for the fiscal years ended June 30, 2024, June 30, 2023, and June 30, 2022, together with the report of the auditors thereon;
- to reappoint Saturna Group Chartered Professional Accountants LLP, as independent auditors for the Company for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors;
- to consider and, if deemed advisable, to pass, with or without variation, an ordinary resolution, as more particularly described in the accompanying management information circular (the “Circular”), to ratify, confirm and approve the Company’s 10% rolling stock option plan; and
- to transact such other business as properly may be brought before the Meeting or any adjournment or postponement thereof.
This notice is accompanied by a form of proxy and the Circular. The specific details of the matters to be put before the Meeting as identified above are set forth in the Circular.
The board of directors of the Company fixed the close of business on March 5, 2025 as the record date for the determination of the shareholders entitled to notice of and vote at the Meeting, and any adjournment or postponement thereof.
Registered shareholders who are unable to attend the Meeting in person are requested to sign and return the enclosed form of proxy to Computershare Investor Services Inc., Proxy Department, 100 University Avenue, 8th Floor, Toronto, ON, M5J 2Y1. To be effective, proxies must be deposited in the manner described in the Circular, by 11:00 a.m. (Pacific Time) on Monday, April 7, 2025 at, or delivered to the Chairman of the Meeting on the day of the Meeting or any adjournment or postponement thereof prior to the Meeting.
Non-registered shareholders who receive these materials through their broker or other intermediary are requested to follow the instructions for voting provided by their broker or intermediary, which may include the completion and delivery of a voting instruction form.
DATED at Vancouver, British Columbia, Canada, March 12, 2025
BY ORDER OF THE BOARD
(Signed) “John MacPhail”
John MacPhail
President and Chief Executive Officer, Director
VALENCIA CAPITAL INC.
INFORMATION CIRCULAR
March 12, 2025
SOLICITATION OF PROXIES
This information circular (the "Circular") is furnished in connection with the solicitation of proxies by the management of Valencia Capital Inc. (the "Company") for use at the annual general meeting of shareholders of the Company (the "Meeting") to be held at 620 – 1111 Melville Street, Vancouver, British Columbia V6E 3V6 on Wednesday, April 9, 2025 at 11:00 a.m. (Pacific time), and at any and all adjournments or postponements thereof, for the purposes set forth in the attached notice of the Meeting (the "Notice"). It is expected that the solicitation of proxies will be made primarily by mail, but proxies may also be solicited personally by directors, officers or regular employees of the Company. Such persons will not receive any extra compensation for such activities. The cost of such solicitation will be borne by the Company.
APPOINTMENT, REVOCATION AND DEPOSIT OF PROXIES
The persons named in the enclosed form of proxy are officers or directors of the Company. A shareholder has the right to appoint a person (who need not be a shareholder) to attend and act for him or her and on his or her behalf at the Meeting other than the persons designated in the enclosed form of proxy. Such right may be exercised by striking out the names of the persons designated in the form of proxy and by inserting in the blank space provided for that purpose the name of the desired person or by completing another proper form of proxy and, in either case, delivering the completed and executed proxy to the Company, c/o Computershare Investor Services Inc., Proxy Department, 8th Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, at any time prior to 11:00 a.m. (Pacific time) on April 7, 2025 or delivered to the Chairman of the Meeting on the day of the Meeting or any adjournment or postponement thereof prior to the Meeting.
A shareholder forwarding the enclosed form of proxy may indicate the manner in which the appointee is to vote with respect to any specific item by marking how such shareholder wishes to vote in the appropriate space. If the shareholder giving the proxy wishes to confer a discretionary authority with respect to any item of business, then the space opposite the item is to be left blank. The Common Shares (as defined below) represented by the proxy submitted by a shareholder will be voted or withheld from voting in accordance with the directions, if any, given in the proxy and if the voting shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly.
A shareholder who has given the enclosed form of proxy has the right to revoke the proxy by depositing an instrument in writing executed by the shareholder or by his or her attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized, at the registered office of the Company at any time prior to 11:00 a.m. (Pacific time) on the last business day preceding the day of the Meeting, or any adjournment or postponement thereof, or with the Chairman of the Meeting on the day of the Meeting, or any adjournment or postponement thereof, or in any other manner permitted by law. The Company's registered office is located at 620 – 1111 Melville Street, Vancouver, British Columbia V6E 3V6.
MANNER OF VOTING AND EXERCISE OF DISCRETION BY PROXIES
The persons named in the enclosed form of proxy will vote or withhold from voting the Common Shares in respect of which they are appointed in accordance with the direction of the shareholders appointing them. In the absence of such direction, such Common Shares will be voted FOR each of the matters identified in the Notice and described in this Circular.
The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice, and with respect to other matters which may properly come before the Meeting. At the time of the printing of this Circular, management of the Company knows of no such amendments, variations or other matters to come before the Meeting other than the matters referred to in the Notice and no director has informed the Company that he intends to oppose any matter to be voted upon.
VOTING BY BENEFICIAL SHAREHOLDERS
The information set forth in this section is important to the shareholders of the Company who do not hold their common shares in their own name.
2
Shareholders who hold Common Shares through their brokers, intermediaries, trustees, or other nominees (such shareholders being collectively called “Beneficial Shareholders”) should note that only proxies deposited by shareholders whose names appear on the share register of the Company as at the record date, March 5, 2025, may be recognized and acted upon at the Meeting. If Common Shares are shown on an account statement provided to a Beneficial Shareholder by a broker, then in almost all cases the name of such Beneficial Shareholder will not appear on the share register of the Company. Such Common Shares will most likely be registered in the name of the broker or an agent of the broker. Such Common Shares can only be voted by brokers, agents or nominees (“Intermediaries”) and can only be voted by them in accordance with instructions received from Beneficial Shareholders. As a result, Beneficial Shareholders should carefully review the voting instructions provided by their broker, agent, or nominee or other intermediary with this Circular and ensure that they communicate how they would like their Common Shares voted in accordance with those instructions.
Most brokers delegate responsibility for obtaining voting instructions from clients to a service company (a “Service Company”). The Service Company typically supplies voting instructions forms, mails those forms to Beneficial Shareholders, and asks those Beneficial Shareholders to return the forms to the Service Company or to follow the alternative voting procedures detailed on the voting instruction form. The Service Company then tabulates the results of all instructions received and provides appropriate instructions respecting the voting of Common Shares at the Meeting. A Beneficial Shareholder receiving a voting instruction form from the Service Company cannot use that form to vote Common Shares directly at the Meeting. Instead, the Beneficial Shareholder must return the voting instruction form to the Service Company or follow the alternative voting procedures, as mentioned above, well in advance of the Meeting in order to ensure that such Common Shares are voted. Alternatively, a Beneficial Shareholder may be given a form of proxy that has already been signed by the Intermediary (typically by a facsimile stamped signature), which is restricted as to the number of Common Shares beneficially owned by the Beneficial Shareholder but which is not otherwise completed. Because the Intermediary has already signed the form of proxy, this form of proxy is required to be signed by the Beneficial Shareholder when submitting the form of proxy. In this case, the Beneficial Shareholder who wishes to vote by proxy should otherwise properly complete the form of proxy and deliver it as specified above.
In either case, the purpose of these procedures is to permit Beneficial Shareholders to direct the voting of the Common Shares of the Company which they beneficially own. A Beneficial Shareholder who wishes to attend and vote at the Meeting in person (or to have another person attend and vote on behalf of the Beneficial Shareholder) should print the Beneficial Shareholder’s (or such other person’s) name in the blank space provided for that purpose in the first paragraph of the proxy form or, in the case of a voting instruction form, follow the corresponding instructions on that form. In either case, Beneficial Shareholders should carefully follow the instructions of their Intermediary and its Service Company, as applicable.
RECORD DATE
The directors have fixed March 5, 2025 as the record date for the determination of shareholders entitled to receive notice of and vote at the Meeting. Only shareholders of record on such date are entitled to vote at the Meeting the Common Shares held by them by attending in person or by providing a completed an executed form of proxy as described above.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The authorized share capital of the Company consists of an unlimited number of common shares (each a “Common Share”). As of the date of this Circular, an aggregate of 11,383,900 Common Shares were issued and outstanding. Each Common Share entitles the holder thereof to one (1) vote at all meetings of shareholders of the Company.
As of the Record Date, to the knowledge of the Company, no person beneficially owned, directly or indirectly, or exercised control or direction over, more than 10% of the Common Shares.
INTERESTS OF CERTAIN PERSONS AND COMPANIES IN MATTERS TO BE ACTED UPON
Except as otherwise disclosed herein, management of the Company is not aware of any material interest, direct or indirect, by way of beneficial ownership of common shares or otherwise, of any director or executive officer or anyone who has held office as such since the beginning of the Company's last financial year, any proposed director of the Company or any associates or affiliates of any of the foregoing in any matter to be acted on at the Meeting other than the election of directors or the appointment of auditors.
At the Meeting, shareholders will be asked to consider and, if thought appropriate, pass an ordinary resolution approving the Company's Stock Option Plan. Under the Stock Option Plan, directors, officers, employees and consultants of the Company are
eligible for grants of options (See “Approval of Stock Option Plan”).
FINANCIAL STATEMENTS
The audited financial statements of the Company and the auditors' report thereon to be received by the shareholders at the Meeting are as at and for the fiscal year ended June 30, 2024, with a comparison to the year ended June 30, 2023, and as at and for the fiscal year ended June 30, 2022, with a comparison to the year ended June 30, 2021. The annual financial statements for the fiscal year ended June 30, 2024 and the comparison year ended June 30, 2023, along with the annual financial statements for the fiscal year ended June 30, 2022 and the comparison year ended June 30, 2021, were audited by Saturna Group Chartered Professional Accountants LLP, the auditors of the Company.
ELECTION OF DIRECTORS
Number of Directors
The directors of the Company are elected annually and hold office until the next annual general meeting of the shareholders or until their successors are elected or appointed. The Management of the Company proposes to nominate the persons listed below for election as directors of the Company to serve until their successors are elected or appointed. In the absence of instructions to the contrary, Proxies given pursuant to the solicitation by the Management will be voted for the nominees listed in this Circular. Management does not contemplate that any of the nominees will be unable to serve as a director. Shareholders will be asked at the Meeting to pass an ordinary resolution to set the number of directors for the ensuing year at three (3).
The following table sets out the names of the nominees for election as directors, the offices they hold within the Company, their occupations, the length of time they have served as directors of the Company, and the number of shares of the Company which each beneficially owns, directly or indirectly, or over which control or direction is exercised, as of the date of this Circular.
| Name of proposed nominee
Province or state and
country of residence | Principal occupation(s) | Director since | Common Shares beneficially owned, controlled or directed^{(1,2)}
(#) |
| --- | --- | --- | --- |
| John MacPhail^{3}
Canada | Formerly Chairman & President of I-5 Holdings Ltd., Chief Executive Officer at Wealthcraft Capital, Inc., Director at Woodbridge Ventures and President of Global Securities Corp, currently President, Chief Executive Officer & Director at Pacific Arc Resources Ltd and Chairman and CEO Frontier Wellness Management Inc. John D. MacPhail is also on the board of three other companies, including Cavalry Capital Corp. | June 19, 2019 | 696,000 |
| Brock Daem^{3}
Canada | Director of Cavalry Capital Corp. since April 2021, director of Pacific Arc Resources Ltd. since January 5, 2018 | June 19, 2019 | 500,000 |
| Graham Heal^{3}
Canada | President & Director of OUT WEST INVESTMENTS COMPANY LIMITED since January, 2021, Director, Business Development of SL MINING GROUP since October 2023 and Director, Africa Development of STONECREST MANAGERS INC. up to April, 2023 | January 27, 2020 | 100,000 |
(1) The information as to Common Shares beneficially owned, controlled or directed, not being within the knowledge of the Company, has been furnished by the respective proposed directors individually.
(2) These Common Shares are subject to escrow restrictions.
(3) Member of the Audit Committee.
Shareholders can vote for all of the above nominees, vote for some of the above nominees and withhold for other of the above nominees, or withhold for all of the above nominees. Unless otherwise indicated, the named proxyholders will vote FOR the election of each of the proposed nominees set forth above as directors of the Company.
Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions or Individual Bankruptcies
To the knowledge of the Company, no director, officer, Insider or Promoter of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company is, or was within 10 years before the date of the prospectus, a director, officer, Insider or Promoter of any other issuer that:
(a) was subject to a cease trade or similar order, or an order that denied the other issuer access to any exemption under applicable securities legislation that was in effect for a period of more than 30 consecutive days that was issued while the director, officer, Insider, Promoter or shareholder was acting in the capacity as director, officer, Insider or Promoter; or
(b) was subject to a cease trade or similar order or an order that denied the other issuer access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days, that was issued after the director, officer, Insider, Promoter or shareholder ceased to be a director, officer, Insider or Promoter and which resulted from an event that occurred while that person was acting in the capacity as director, officer, Insider or Promoter.
Individual Bankruptcies
No director or proposed director of the Company has, within the ten years prior to the date of this Circular, become bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.
Penalties or Sanctions
None of the proposed directors have been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority, has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable security holder making a decision about whether to vote for the proposed director.
STATEMENT OF EXECUTIVE COMPENSATION
Named Executive Officers
During the financial years ended June 30, 2024, June 30, 2023, and June 30, 2022, the Company had two Named Executive Officers ("NEO") being, John MacPhail, the President and Chief Executive Officer ("CEO") of the Company, and Adam Garvin, the Chief Financial Officer ("CFO") and Corporate Secretary of the Company.
"Named Executive Officer" means: (a) each CEO, (b) each CFO, (c) each of the three most highly compensated executive officers of the company, including any of its subsidiaries, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000; and (d) each individual who would be a NEO under (c) above but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of that financial year.
Compensation Discussion and Analysis
The compensation of the executive officers is determined by the board of directors of the Company (the "Board"), based, in part, on recommendations from the President and Chief Executive Officer.
The Board evaluates individual executive performance with the goal of setting compensation at levels that they believe are comparable with executives in other companies of similar size and stage of development operating in the same industry. In connection with setting appropriate levels of compensation, the Board base their decisions on their general business and industry knowledge and experience and publicly available information of comparable companies while also taking into account our
relative performance and strategic goals.
The executive officer compensation consists of two basic elements: i) base salary; and ii) incentive stock options. The details are set out in the Summary Compensation Table.
The base salary established for each executive officer is intended to reflect each individual's responsibilities, experience, prior performance and other discretionary factors deemed relevant by the Board. In deciding on the salary portion of the compensation of the executive officers, major consideration is given to the fact that the Company is a capital pool company and does not generate any material revenue and must rely exclusively on funds raised from equity financing. Therefore, greater emphasis may be put on incentive stock option compensation.
The incentive stock option portion of the compensation is designed to provide the executive officers of the Company with a long term incentive in developing the Company's business. Options granted under the Company's stock option plan are approved by the Board, and if applicable, its subcommittees, after consideration of the Company's overall performance and whether the Company has met targets set out by the executive officers in their strategic plan.
Pursuant to a consulting agreement dated March 10, 2021, the Company has agreed to pay $1,500 plus GST per month to a company controlled by Mr. Garvin and to issue 150,000 shares upon completion of a qualifying transaction of the resulting issuer to Mr. Garvin. During the year ended June 30, 2024, the Company incurred professional fees of $18,000 (2023 - $18,000) to a company controlled by the Chief Financial Officer of the Company. During the year ended June 30, 2022, the Company incurred professional fees of $18,000 (2021 - $6,000) to a company controlled by the Chief Financial Officer of the Company.
The Board has not formally considered the risks associated with the Company's compensation policies and practices. The Company has attempted to minimize those compensation practices and policies that expose the Company to inappropriate or excessive risks. The Company's NEOs and directors are not permitted to purchase financial instruments, including for greater certainty, prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director.
Option-based Awards
The incentive stock option portion of the compensation is designed to provide the executive officers of the Company with a long-term incentive in developing the Company's business. Options granted under the Company's stock option plan are approved by the Board, and if applicable, its subcommittees, after consideration of the Company's overall performance and whether the Company has met targets set out by the executive officers in their strategic plan.
Summary Compensation Table
Set out below is a summary of compensation paid or accrued during the Company's three most recently completed financial years to the Company's NEOs.
| Name and Principal Position | Year | Salary ($) | Share-based Awards ($) | Option-based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | Total Compensation ($) | ||
|---|---|---|---|---|---|---|---|---|---|
| Annual incentive plan | Long-term incentive plans | All other compensation ($) | |||||||
| John MacPhail | 2024 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| President and CEO | 2023 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
7
| Adam Garvin
CFO and Corporate
Secretary | 2024
2023
2022 | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A | 18,000
18,000
18,000 | 18,000
18,000
18,000 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
INCENTIVE PLAN AWARDS
Outstanding Option-Based Awards and Share-Based Awards
As mentioned previously, the Company does not have a share-based award plan. The table below shows all options held by the NEOs as at June 30, 2024, June 30, 2023, and June 30, 2022.
| Option-based Awards | Share-based Awards | ||||||
|---|---|---|---|---|---|---|---|
| Name | Number of Common Shares underlying unexercised options (#) | Option exercise price(1) ($) | Option expiration date | Value of unexercised in-the-money options(2) ($) | Number of shares or units of shares that have not vested (#) | Market or payout value of share-based awards that have not vested ($) | Market or payout value of vested share-based awards not paid out or distributed ($) |
| John MacPhail | |||||||
| President and CEO (from June 19, 2019) | 134,000 | 0.10 | August 14, 2025 | ||||
| May 5, 2026 | Nil | Nil | N/A | N/A | |||
| 118,140 | 0.10 | Nil | Nil | N/A | N/A | ||
| Adam Garvin | |||||||
| CFO and Corporate | |||||||
| Secretary (from February 19, 2021) | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
Incentive Plan Awards Table
The following table sets out values of incentive stock options vested or earned by the NEOs during the years ended June 30, 2024, June 30, 2023, and June 30, 2022.
| Name | Option-based awards – Value vested during the year ($) | Share-based awards – Value vested during the year ($) | Non-equity incentive plan compensation – Value earned during the year ($) |
|---|---|---|---|
| John MacPhail | |||
| President and CEO (from June 19, 2019) | Nil | Nil | Nil |
| Adam Garvin | |||
| CFO and Corporate Secretary (from February 19, 2021) | Nil | Nil | Nil |
PENSION PLAN BENEFITS
The Company does not maintain a pension plan for its employees and therefore no benefits were received.
TERMINATION AND CHANGE OF CONTROL BENEFITS
Neither the Company or any of its subsidiaries has any plan or arrangement with respect to compensation to its executive officers which would result from the resignation, retirement or any other termination of employment of the executive officers' employment with the Company and its subsidiaries or from a change of control of the Company or any subsidiary of the Company or a change in the executive officers' responsibilities following a change in control.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION TABLE
| Name and Principal Position | Year | Fees Earned ($) | Share-based Awards ($) | Option-based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compensation ($) | Total Compensation ($) |
|---|---|---|---|---|---|---|---|---|
| John MacPhail | ||||||||
| President, CEO, and Director | 2024 | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| 2023 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| 2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| Brock Daem | ||||||||
| Director | 2024 | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| 2023 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| 2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| Graham Heal | ||||||||
| Director | 2024 | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| 2023 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| 2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
The Company has no standard arrangement pursuant to which Directors are compensated by the Company for their services in their capacity as Directors other than the unissued treasury shares that may be issued upon the exercise of the Directors' Stock Options. There has been no other arrangement pursuant to which Directors were compensated by the Company in their capacity as Directors except as disclosed herein.
INCENTIVE PLAN AWARDS
Outstanding Option-Based Awards and Share-Based Awards
As mentioned previously, the Company does not have a share-based award plan. The table below shows all options held by directors as at June 30, 2024, , 2023, and, 2022.
| Option-based Awards | Share-based Awards | ||||||
|---|---|---|---|---|---|---|---|
| Name | Number of Common Shares underlying unexercised options (#) | Option exercise price^{(1)} ($) | Option expiration date | Value of unexercised in-the-money options^{(2)} ($) | Number of shares or units of shares that have not vested (#) | Market or payout value of share-based awards that have not vested ($) | Market or payout value of vested share-based awards not paid out or distributed ($) |
| John MacPhail | 1 | N/A | N/A | N/A | N/A | N/A | N/A |
| President, CEO, and Director | 1 | N/A | N/A | N/A | N/A | N/A | N/A |
| Brock Daem | 1 | N/A | N/A | N/A | N/A | N/A | N/A |
| Director | 1 | N/A | N/A | N/A | N/A | N/A | N/A |
9
| John MacPhail
President, CEO,
and Director | 134,000 | 0.10 | August 14, 2025 | Nil | Nil | N/A | N/A |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | 118,140 | 0.10 | May 5, 2026 | Nil | Nil | N/A | N/A |
| Brock Daem,
Director | 134,000 | 0.10 | August 14, 2025 | Nil | Nil | N/A | N/A |
| | 118,140 | 0.10 | May 5, 2026 | Nil | Nil | N/A | N/A |
| Graham Heal,
Director | 40,000 | 0.10 | August 14, 2025 | Nil | Nil | N/A | N/A |
| | 35,265 | 0.10 | May 5, 2026 | Nil | Nil | N/A | N/A |
Equity Compensation Plan Information
The following table sets forth, as of June 30, 2024, June 30, 2023, and June 30, 2022, information concerning securities authorized for issue under the Stock Option Plan, which is the only equity compensation plan of the Company.
| Plan Category | Securities to be issued upon exercise of outstanding options (#) | Weighted average exercise price of outstanding options (CDN$) | Securities remaining available for future issuance under equity compensation plans (#) |
|---|---|---|---|
| Equity compensation plans approved by securityholders (the only such plan is the stock option plan) | 1,138,390 | $0.10 | Nil(1) |
| Equity compensation plans not approved by securityholders | N/A | N/A | N/A |
| Total | 1,138,390 | $0.10 | Nil |
(1) Pursuant to the Stock Option Plan, subject to other restrictions, 10% of the number of outstanding Common Shares from time to time is available for issuance pursuant to options granted under the Stock Option Plan. This amount is calculated by subtracting the 1,138,390 Common Shares that could be issued upon exercise of options granted and outstanding as at June 30, 2024 from the total amount that could be granted pursuant to the Stock Option Plan, based on 11,383,900 Common Shares outstanding as at June 30, 2024.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
None of the current or former directors, executive officers, employees of the Company, the proposed nominees for election to the Board, or their respective associates or affiliates, are or have been indebted to the Company since the beginning of the most recently completed financial year of the Company.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
None of the persons who were directors or executive officers of the Company or a subsidiary at any time during the Company's
last completed financial year, the proposed nominees for election to the Board, any person or company who beneficially owns, directly or indirectly, or who exercises control or direction over (or a combination of both) more than 10% of the issued and outstanding common shares of the Company, nor the associates or affiliates of those persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any transaction or proposed transaction which has materially affected or would materially affect the Company.
APPOINTMENT OF AUDITORS
Management intends to nominate Saturna Group Chartered Professional Accountants LLP, for re-appointment as auditor of the Company. Forms of proxies given pursuant to this solicitation will, on any poll, be voted as directed and, if there is no direction, for the re-appointment of Saturna Group Chartered Professional Accountants LLP, as the auditor of the Company to hold office until the next annual meeting of shareholders or until it resigns or is removed from office by the Company, with remuneration to be fixed by the directors.
Shareholders will be asked to consider and, if thought fit, to pass an ordinary resolution, in substantially the following form, subject to such changes as may be recommended by legal counsel or required by regulatory authorities:
"RESOLVED THAT:
Saturna Group Chartered Professional Accountants LLP, be appointed as the Company's auditor until the next annual meeting of shareholders following the Meeting, or until it resigns or is removed from office by the Company, with remuneration to be approved by the Board."
MANAGEMENT CONTRACTS
Other than as disclosed elsewhere in this Circular, no Management functions of the Company are to any substantial degree performed by a person or company other than the directors or NEOs of the Company.
Audit Committee Charter
The text of the Audit Committee's charter is attached as Schedule "A" to this Circular.
Composition of the Audit Committee
The Company's current Audit Committee consists of John MacPhail, Brock Daem, and Graham Heal, with Mr. Daem serving as Chair of the Committee.
National Instrument 52-110 Audit Committees ("NI 52-110") exempts the members of the Company's Audit Committee from being independent and financially literate since the Company is a venture issuer (as defined in NI 52-110). By virtue of being a venture issuer, the Company is also exempt from certain reporting obligations under NI 52-110.
To be considered independent, a member of the Audit Committee must not have any direct or indirect "material relationship" with the Company. A "material relationship" is a relationship which could, in the view of the Board be reasonably expected to interfere with the exercise of a member's independent judgment. Also, to be considered financially literate, a member of the Audit Committee must have the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements. Based on these requirements, all the members of the Audit Committee are considered to be independent and financially literate.
In assessing the financial literacy of each member of the Audit Committee, the following relevant education and experience of the members of the Audit Committee was considered:
- John MacPhail
Founder of I-5 Holdings Ltd., John Dugard MacPhail is a businessperson who has been at the helm of nine different companies and currently holds the position of Chairman at Wealthcraft Capital, Inc., Chairman at Green Stripe Naturals Ltd., Chairman & Chief Executive Officer at Frontier Wellness Management, Inc., President, Chief Executive Officer
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& Director at Pacific Arc Resources Ltd., director of Cavalry Capital Corp., and President, Chief Executive Officer & Director at Valencia Capital, Inc. John Dugard MacPhail is also on the board of Eastwest Science Ltd. and MainStem, Inc. Mr. MacPhail previously held the position of Chairman, President & Chief Executive Officer for I-5 Holdings Ltd., Chief Executive Officer of Union Securities Ltd., Chief Executive Officer, Secretary & Director at Woodbridge Ventures, Inc., President of Global Securities Corporation, Director at Orion Securities, Inc., Director at Research Capital Corp. and Floor Trader at Vancouver Stock Exchange.
- Brock Daem
Mr. Brock Daem has served as a director of Cavalry Capital Corp. since April 2021 and a director of Pacific Arc Resources Ltd. since January 11, 2018. Mr. Daem has experience in investment banking, merchant banking, and institutional sales in Canada. Mr. Daem began his career in institutional equity sales, leading initial public offerings and secondary private placements for micro-cap stocks in Vancouver and in Toronto before transitioning into investment banking focused on various sectors. Mr. Daem attended the University of British Columbia in 1992 and obtained a personal financial planner designation from the Canadian Securities Institute in 2006.
- Graham Heal
Mr. Heal has a business career spanning 35 years being involved in a number of ventures in Africa including Director of Africa Development at StoneCrest Managers Inc., Director of Business Development at SL Mining Group, Director at StoneCrest Burkina SARL, President and Director of Out West Investments Company Limited, Director of Genmin Resources Pty Ltd. (Zimbabwe) and Infracons Development Corp. (Rwanda) which are all ventures involved in precious metals trading or power generation. Mr. Heal obtained a Bachelor of Arts (Economic Geography) degree from the University of British Columbia in 1983.
Audit Committee Oversight
Since the commencement of the Company's most recently completed financial year, there has not been a recommendation of the Audit Committee to nominate or compensate an external auditor which was not adopted by the Board.
Reliance on Certain Exemptions
Since the commencement of the Company's most recently completed financial year, the Company has not relied on the exemption in Section 2.4 (De Minimis Non-Audit Services) of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 (Exemptions) of NI 52-110.
Pre-Approval Policies and Procedures
The Audit Committee has not adopted any specific policies and procedures for the engagement of non-audit services.
External Auditor Service Fees (By Category)
The following table discloses the fees billed to the Company by its external auditor during each of the last three financial years.
| Financial year ended | Audit fees(1) (CDN$) | Audit-related fees(2) (CDN$) | Tax fees(3) (CDN$) | All other fees (CDN$) |
|---|---|---|---|---|
| June 30, 2024 | 8,500 | N/A | N/A | N/A |
| June 30, 2023 | 8,000 | N/A | 1,000 | N/A |
| June 30, 2022 | 7,000 | N/A | 1,000 | N/A |
(1) The aggregate fees billed related to the fiscal year audit, notwithstanding when the fees were billed or when the services were rendered.
(2) The aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements and are not disclosed in the "Audit fees" column.
(3) The aggregate fees for tax compliance, tax advice and tax planning for services rendered from July through June of the fiscal year, notwithstanding when the fees were billed.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Corporate Governance Practices
National Instrument 58-101 - Disclosure of Corporate Governance Practices, requires all reporting issuers to provide certain annual disclosure of their corporate governance practices with respect to the corporate governance guidelines (the "Guidelines") adopted in National Policy 58-201. These Guidelines are not prescriptive, but have been used by the Company in adopting its corporate governance practices. The Board and Management consider good corporate governance to be an integral part of the effective and efficient operation of Canadian corporations. The Company's approach to corporate governance is set out below.
The Board believes that at this stage its approach to corporate governance is appropriate and continues to work to align with the recommendations for TSXV-listed issuers contained in National Policy 58-201 - Corporate Governance Guidelines ("NP 58-201").
Composition of the Board
Management is proposing the election at the Meeting of three (3) nominees, all of whom are current directors. Two (2) of the nominees for director are deemed to be independent. The directors will hold office until the next annual meeting of shareholders or until their respective successors is elected or appointed. The Board may appoint additional directors subsequent to the Meeting as provided in the by-laws and articles of the Company. Under NI 52-110, a director is considered to be "independent" if he or she has no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Board, reasonably interfere with the exercise of a director's independent judgment. In addition, certain individuals are deemed, for the purposes of NP 58-201, to have material relationships with the Company. Under this definition, the proposed Board will have two (2) independent directors: Brock Daem and Graham Heal. John MacPhail is the director, President, and CEO, and accordingly, as an executive officer, is not independent.
The following table discloses the proposed nominees for director, whether or not they are considered independent within the meaning of NI 52-110.
| Name | Independence | Reason for not being independent where applicable |
|---|---|---|
| John MacPhail | Not Independent | Mr. MacPhail is not independent by virtue of being President and CEO of the Company. |
| Brock Daem | Independent | N/A |
| Graham Heal | Independent | N/A |
Other Directorships
The following table discloses the proposed nominees for director and other directorships they hold with issuers that are reporting issuers or the foreign equivalent as of the date of this Circular.
| Name | Other reporting issuer(s) (or foreign equivalent) of which such director is also a director(1) |
|---|---|
| John MacPhail | President, CEO, and Director of Pacific Arc Resources Ltd. (NEX: PAV); Director of MiMedia Holdings Inc. (TSXV: MIM), Director of Cavalry Capital Corp. (TSXV: CVY.P) |
| Brock Daem | Director of Pacific Arc Resources Ltd. (NEX: PAV), director of Cavalry Capital Corp. (TSXV: CVY.P) |
(1) This information, not being within the knowledge of the Company, has been furnished by the respective directors individually.
Ethical Business Conduct
The Board has found that the fiduciary duties placed on individual directors by the Company's governing corporate legislation
and the common law and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.
Under the corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Company and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and disclose to the board the nature and extent of any interest of the director in any material contract or material transaction, whether made or proposed, if the director is a party to the contract or transaction, is a director or officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. The director must then abstain from voting on the contract or transaction unless the contract or transaction (i) relates primarily to their remuneration as a director, officer, employee or agent of the Company or an affiliate of the Company, (ii) is for indemnity or insurance for the benefit of the director in connection with the Company, or (iii) is with an affiliate of the Company. If the director abstains from voting after disclosure of their interest, the directors approve the contract or transaction and the contract or transaction was reasonable and fair to the Company at the time it was entered into, the contract or transaction is not invalid and the director is not accountable to the Company for any profit realized from the contract or transaction. Otherwise, the director must have acted honestly and in good faith, the contract or transaction must have been reasonable and fair to the Company and the contract or transaction be approved by the shareholders by a special resolution after receiving full disclosure of its terms in order for the director to avoid such liability or the contract or transaction being invalid.
Nomination of Directors
The Board is responsible for identifying individuals qualified to become new Board members and recommending to the Board new director nominees for the next annual meeting of shareholders. New nominees must have a track record in general business management, special expertise in an area of strategic interest to the Company, the ability to devote the time required, show support for the Company's mission and strategic objectives, and a willingness to serve.
Compensation
The Board conducts reviews with regard to directors' compensation once a year. To make its recommendation on directors' compensation, the Board takes into account the types of compensation and the amounts paid to directors of comparable publicly traded Canadian companies and aligns the interests of Directors with the return to shareholders. The Board decides the compensation of the Company's officers, based on industry standards and the Company's financial situation.
Other Committees
The Company and the Board have no committees other than the Audit Committee.
Assessments
The Board monitors the adequacy of information given to directors, communication between the board and management and the strategic direction and processes of the board and committees.
PARTICULARS OF MATTERS TO BE ACTED UPON
APPROVAL OF STOCK OPTION PLAN
On June 3, 2020, the Company approved a share option plan (the "Stock Option Plan") whereby a maximum of 10% of common shares issued and outstanding is reserved for the issuance of non-transferable options to directors and officers. This option plan provides that the terms and conditions of the options and the exercise price of options will be determined by the directors subject to price restrictions and other requirements imposed by the TSX Venture Exchange Inc. (the "TSXV"). The period for exercising the options granted under the option plan cannot exceed a period of ten years and the exercise price must be fully paid before the issuance of shares. At the last annual general and special meeting of shareholders of the Company held on October 29, 2021, the shareholders approved amendments to the Stock Option Plan to update it in accordance with the updates to TSX Venture Exchange Policy 2.4 – Capital Pool Companies, which became effective January 1, 2021. The principal amendment to the Stock Option Plan was a change to a "10% rolling" plan, such that the total number of Common Shares that may be reserved for issuance pursuant to options under the Plan may not exceed 10% of the Common Shares issued and outstanding at the date of grant, instead of at the closing of the Company's initial public offering on August 14, 2020 (the "IPO"). Another amendment to
the Stock Option Plan was that prior to the completion of its Qualifying Transaction (as defined in the Stock Option Plan): (i) the number of Common Shares reserved for issuance as options under the Stock Option Plan to any individual director or senior officer may not exceed 5% of the Common Shares outstanding as at the date of grant, rather than at the closing of the IPO; (ii) the number of Common Shares reserved for issuance as options under the Stock Option Plan to Consultants (as defined in the Stock Option Plan), may not exceed 2% of the Common Shares outstanding as at the date of grant, rather than at the closing of the IPO; and (iii) no options granted pursuant to the Stock Option Plan may be granted unless the optionee first enters into an escrow agreement agreeing to deposit the options, and the Common Shares acquired pursuant to the exercise of such options, into escrow as described in the escrow agreement.
In order to be effective, an ordinary resolution requires the approval of a majority of the votes cast by shareholders who vote in respect of the resolution. Unless otherwise specified, the persons named in the enclosed form of proxy will vote FOR the approval of the Stock Option Plan.
The text of the resolution approving the continuation of the Stock Option Plan to be considered at the Meeting will be substantially as follows:
“RESOLVED THAT:
Subject to the approval of the TSX Venture Exchange, the Company’s incentive stock option plan, which makes a total of 10% of the issued and outstanding shares of the Company available for issuance thereunder as described in the Company’s Management Information Circular dated March 12, 2025, be and is hereby ratified, confirmed and approved.”
ADDITIONAL INFORMATION
A copy of this Circular is filed on the SEDAR+ website (www.sedarplus.ca). Additional information relating to the Company may be obtained from the SEDAR+ website. Financial information is provided in the Company’s comparative financial statements and MD&A for its most recently completed financial year under the Company’s profile on the SEDAR+ website (www.sedarplus.ca). Shareholders of the Company may request copies of the Circular and/or the Company's financial statements and management's discussion and analysis of financial condition and results of operations free of charge by e-mail: [email protected].
DIRECTORS' APPROVAL
The contents and the sending of this Circular to the shareholders of the Company have been approved by the Board. Unless otherwise indicated herein, information contained in this Circular is given as at March 12, 2025.
DATED at Vancouver, British Columbia this 12th day of March, 2025.
BY ORDER OF THE BOARD
(Signed) “John MacPhail”
John MacPhail
President and Chief Executive Officer
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Schedule “A”
AUDIT COMMITTEE CHARTER
VALENCIA CAPITAL INC.
(the “Company”)
- OVERALL PURPOSE AND OBJECTIVES
The Audit Committee will assist the directors (the “Directors”) of the Company in fulfilling their responsibilities under applicable legal and regulatory requirements. To the extent considered appropriate by the Audit Committee or as required by applicable legal or regulatory requirements, the Audit Committee will review the financial reporting process of the Company, the system of internal controls and management of the financial risks of the Company and the audit process of the financial information of the Company. In fulfilling its responsibilities, the Audit Committee should maintain an effective working relationship with the Directors, management of the Company and the external auditor of the Company as well as monitor the independence of the external auditor.
- AUTHORITY
(a) The Audit Committee shall have the authority to:
(i) engage independent counsel and other advisors as the Audit Committee determines necessary to carry out its duties;
(ii) set and pay the compensation for any advisors employed by the Audit Committee;
(iii) communicate directly with the internal and external auditor of the Audit Committee and require that the external auditor of the Company report directly to the Audit Committee; and
(iv) seek any information considered appropriate by the Audit Committee from any employee of the Company.
(b) The Audit Committee shall have unrestricted and unfettered access to all personnel and documents of the Company and shall be provided with the resources reasonably necessary to fulfill its responsibilities.
- MEMBERSHIP AND ORGANIZATION
(a) The Audit Committee will be composed of at least three members. The members of the Audit Committee shall be appointed by the Directors to serve one-year terms and shall be permitted to serve an unlimited number of consecutive terms. The majority of the members of the Audit Committee must be Directors who are independent and financially literate to the extent required by (and subject to the exemptions and other provisions set out in) applicable laws, rules and regulations, and stock exchange requirements (“Applicable Laws”). In this Charter, the terms “independent” and “financially literate” have the meaning ascribed to such terms by Applicable Laws, and include the meanings given to similar terms by Applicable Laws, including in the case of the term “independent” the terms “outside” and “unrelated” to the extent such latter terms are applicable under Applicable Laws.
(b) The chairman of the Audit Committee will be an independent Director and will be appointed by the Audit Committee from time to time and must have such accounting or related financial management expertise as the Directors may determine in their business judgment.
(c) The secretary of the Audit Committee will be the chosen by the Audit Committee.
(d) The Audit Committee may invite such persons to meetings of the Audit Committee as the Audit Committee considers appropriate, except to the extent exclusion of certain persons is required pursuant to this Charter or Applicable Laws.
(e) The Audit Committee may invite the external auditor of the Company to be present at any meeting of the Audit Committee and to comment on any financial statements, or on any of the financial aspects, of the Company.
(f) The Audit Committee will meet as considered appropriate or desirable by the Audit Committee. Any member of the Audit Committee or the external auditor of the Company may call a meeting of the Audit Committee at any time upon 48 hours’ prior written notice.
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(g) All decisions of the Audit Committee shall be by simple majority and the chairman of the Audit Committee shall not have a deciding or casting vote.
(h) Minutes shall be kept in respect of the proceedings of all meetings of the Audit Committee.
(i) No business shall be transacted by the Audit Committee except at a meeting of the members thereof at which a majority of the members thereof is present.
(j) The Audit Committee may transact its business by a resolution in writing signed by all the members of the Audit Committee in lieu of a meeting of the Audit Committee.
4. ROLE AND RESPONSIBILITIES
To the extent considered appropriate or desirable or required by applicable legal or regulatory requirements, the Audit Committee shall:
(a) recommend to the Directors
(i) the external auditor to be nominated for the purpose of preparing or issuing an auditor's report on the annual financial statements of the Company or performing other audit, review or attest services for the Company, and
(ii) the compensation to be paid to the external auditor of the Company;
(b) review the proposed audit scope and approach of the external auditor of the Company and ensure no unjustifiable restriction or limitations have been placed on the scope of the proposed audit;
(c) meet separately and periodically with the management of the Company, the external auditor of the Company and the internal auditor (or other personnel responsible for the internal audit function of the Company) of the Company to discuss any matters that the Audit Committee, the external auditor of the Company or the internal auditor of the Company, respectively, believes should be discussed privately;
(d) be directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor's report on the annual financial statements of the Company or performing other audit, review or attest services for the Company, including the resolution of disagreements between management of the Company and the external auditor of the Company regarding any financial reporting matter and review the performance of the external auditor of the Company;
(e) review judgmental areas, for example those involving a valuation of the assets and liabilities and other commitments and contingencies of the Company;
(f) review audit issues related to the material associated and affiliated entities of the Company that may have a significant impact on the equity investment therein of the Company;
(g) meet with management and the external auditor of the Company to review the annual financial statements of the Company and the results of the audit thereof;
(h) review and determine if internal control recommendations made by the external auditor of the Company have been implemented by management of the Company;
(i) pre-approve all non-audit services to be provided to the Company or any subsidiary entities thereof by the external auditor of the Company and, to the extent considered appropriate:
(i) adopt specific policies and procedures in accordance with Applicable Laws for the engagement of such non-audit services; and/or
(ii) delegate to one or more independent members of the Audit Committee the authority to pre-approve all non-audit services to be provided to the Company or any subsidiary entities thereof by the external
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auditor of the Company provided that the other members of the Audit Committee are informed of each such non-audit service;
(j) consider the qualification and independence of the external auditor of the Company, including reviewing the range of services provided by the external auditor of the Company in the context of all consulting services obtained by the Company;
(k) consider the fairness of the Interim Financial Report and financial disclosure of the Company and review with management of the Company whether,
(i) actual financial results for the interim period varied significantly from budgeted or projected results,
(ii) generally accepted accounting principles have been consistently applied,
(iii) there are any actual or proposed changes in accounting or financial reporting practices of the Company, and
(iv) there are any significant or unusual events or transactions which require disclosure and, if so, consider the adequacy of that disclosure;
(l) review the financial statements of the Company, management's discussion and analysis and any annual and interim earnings press releases of the Company before the Company publicly discloses such information and discuss these documents with the external auditor and with management of the Company, as appropriate;
(m) review and be satisfied that adequate procedures are in place for the review of the public disclosure of the Company of financial information extracted or derived from the financial statements of the Company, other than the public disclosure referred to in paragraph 4(l) above, and periodically assess the adequacy of those procedures;
(n) establish procedures for,
(i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and
(ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters relating to the Company;
(o) review and approve the hiring policies of the Company regarding partners, employees and former partners and employees of the present and any former external auditor of the Company;
(p) review the areas of greatest financial risk to the Company and whether management of the Company is managing these risks effectively;
(q) review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and consider their impact on the financial statements of the Company;
(r) review any legal matters which could significantly impact the financial statements of the Company as reported on by counsel and meet with counsel to the Company whenever deemed appropriate;
(s) institute special investigations and, if appropriate, hire special counsel or experts to assist in such special investigations;
(t) at least annually, obtain and review a report prepared by the external auditor of the Company describing:
the firm's quality-control procedures;
any material issues raised by the most recent internal quality-control review or peer review of the firm or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, in respect of one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;
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and (to assess the auditor's independence) all relationships between the independent auditor and the Company;
(u) review with the external auditor of the Company any audit problems or difficulties and management's response to such problems or difficulties;
(v) discuss the Company's earnings press releases, as well as financial information and earning guidance provided to analysts and rating agencies, if applicable; and
(w) review this charter and recommend changes to this charter to the Directors from time to time.
- COMMUNICATION WITH THE DIRECTORS
(a) The Audit Committee shall produce and provide the Directors with a written summary of all actions taken at each Audit Committee meeting or by written resolution.
(b) The Audit Committee shall produce and provide the Directors with all reports or other information required to be prepared under Applicable Laws.
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